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Tesla rebound? Options traders make big bets into earnings

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Tesla finds itself starting 2022 in reverse, with its shares declining more than 9% to begin the year.
Elon Musk’s electric automaker is scheduled to report earnings after the bell on Wednesday, and options traders are betting those results could be just the thing to kick the stock into high gear.
“Right now, the options market is implying a move of more than 10% higher or lower by the end of the week. That’s larger than the 7%, or so, that it has averaged over the last eight quarters,” Michael Khouw, chief investment officer at Optimize Advisors, said Tuesday on CNBC’s “Fast Money.”
Like many stocks reporting in the midst of increased market volatility, Tesla’s implied post-earnings move is much larger than it would normally be, and much of Tuesday’s trading activity suggested optimism that the company’s move would be higher.
“Calls did outpace puts, options traders got net-longer by about $226 million overall,” said Khouw, “and the Jan. 28 weekly 950-calls, just over 43,000 of those traded for an average price of slightly under $36 each. Buyers of those calls are obviously betting the news could be good and the stock could finish the week higher.”
Those call contracts expire at this Friday’s closing bell at a break-even stock price of $985.84, or about 7.35% higher than where Tesla closed Tuesday’s session.
Tesla was more than 4% higher Wednesday afternoon.

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